T-bill yields hold up well amid uncertainty around interest rates

Analysts expect yields of around 3.5%-3.8%, making T-bills a good option to park money

- Chor Khieng Yuit

There is plenty of uncertainty around interest rates at the moment, but the yields on Singapore Treasury Bills (T-bills) are still holding up pretty well.

The auction of one-year T-bills on April 18 produced a cut-off yield of 3.58 per cent, after falling to 3.45 per cent in the previous auction on January 25.

The cut-off yield on six-month Tbills dipped from 3.8 per cent to 3.75 per cent at the April 11 auction.

Market watchers expect T-bill yields to hover around 3.5 per cent to 3.8 per cent, given that the United States Federal Reserve signalled on April 16 that it will wait longer than previously anticipated to cut rates.

Yields above 3.5 per cent make Tbills a good option for investors to park their money while weighing other investment alternatives.

Remarks from US Fed chairman Jerome Powell on April 16 reflect a shift from December, when he had indicated that the rates were to be eased.

The change comes as the US economy continues to add jobs while retail sales remain strong and inflation shows few signs of slowing.

Mr Wong Di Ming, research analyst in the bond research team at Bondsupermart, said tensions in the Middle East have pushed up oil prices, which have helped keep inflation high.

The markets have already adjusted and are now pricing in two to three interest rate cuts in 2024, from the six cuts expected earlier in the year, Mr Wong said.